People moving house often lean on their support network, in the form of friends and family, to guide their life’s essential uprooting and replanting. Before packing and unpacking, movers do plenty of research, planning, and preparation. But what happens to your mortgage when you move? Solving that issue requires similar support from a mortgage broker, and similar research, as outlined below.
Mortgage Options for Moving House
Moving house presents two clear mortgage options: transferring the same mortgage to your new home (portable mortgaging) or re-entering the market for a new mortgage rate (remortgaging). As with any financial decision, it’s worth developing a rich understanding of what happens to your mortgage when you move. Ultimately, your goals and unique financial circumstances shape your decision and guide you to your dream home with an optimised mortgage.
Many people opt for portable mortgaging to keep a sense of familiarity during tumultuous relocations. If your financial situation remains the same as when you first took out the mortgage and estate agents judge your new property at a similar value as your previous home, portable mortgaging makes sense.
However, considering both options gives greater confidence in your final decision. If the housing market looks markedly different to when you borrowed for the old mortgage, remortgaging may well be worth your while. Alternatively, you may just be curious about other rates.
Remortgaging: Shopping Around
Consumers have plenty of power when it comes to shopping around, and mortgaging is no exception. Even if it’s not all paid off, selling your home generates plenty of fluidity to cover your existing mortgage and try something new. Other lenders may provide more competitive rates, depending on your priorities and the current housing market.
Of course, authorities heavily legislate on mortgages. Borrowing hinges upon regulations and a variety of other key factors, including inflation, house prices, your personal finances, and a lenders’ trust.
Considering all the variables, there may well be an ideal new mortgage rate out there just waiting for you to find it. Even if your existing provider charges exit or remortgaging fees, a more competitive mortgage could be a financially savvy long-term investment.
Things to Consider: What Happens to Your Mortgage When You Move
Each decision brings positives and negatives, and your options also depend on how much of the mortgage you’ve paid off. If you’re right at the start of your loan, then an instant remortgage may not be the best call. However, if you’re well into your term, you may want to see what’s out there and try something new.
Does Your Mortgage Provider Provide For Your New Area?
While some high street banks and national providers cover the whole of the UK and beyond, others might specialise in a certain area. Even if you have a great relationship with your local advisor, it might be time to find a new lender if they don’t cover your ideal location.
Have Your Circumstances Changed?
Finances change all the time, for better and for worse. You may be in a completely different situation from when you took out your previous mortgage, yet you stayed on the same fixed rate. Moving house might be the perfect time to remortgage, or renegotiate a different, more favourable rate suited to your situation.
Comparing The Cost: Ease Versus Fees
Most buyers know to factor mortgage broker fees and other moving expenses into their budget. Don’t let fees from one moving option put you off when all the other alternatives have equivalent fees. Whether it’s cancellation fees, early exit fees, brokerage fees, solicitor fees, or any other expense, these costs are all part of the package. Either way, these obstacles pale in comparison to the prize of moving to a great new home.
What Happens to Your Mortgage When You Move in Different Interest Rates?
The relationship between interest rates and the housing market turns homes into valuable investments. Particularly when interest rates slump, spending big on a new house may well pay off as prices rise. There are so many moving parts involved, quite apart from you and your possessions. When deciding on your mortgage options, factor in your current rate and whether it’s fixed or variable. If your fixed rate is now out of date, new rates may interest you elsewhere.
Pros and Cons: Portable Mortgages
Of course, the main upside of sticking with your current provider is simplicity and familiarity. Portable mortgages cut down hassle, paperwork, outsourcing, and new introductions. Portable mortgages work great if you’re happy with your rate and your current provider.
The only con, in that case, might be the early repayment fees and processing fees. Movers incur these costs even when they port their current mortgage rate, as they technically pay off one and start another. Apart from that, you pay the opportunity cost of missing out on other rates. If you end up paying these expenses and learn about better rates later down the line, you may wish you’d switched and gone elsewhere.
Conclusions: Mortgage Advice
No matter what happens to your mortgage when you move, it’s always better to get a mortgage broker on-side to guide you through. Even if you shop around for a mortgage and end up deciding to stick with your existing provider, you can rest assured knowing you’ve assessed all the options. Understanding the market, your current deal, and how to land the perfect mortgage becomes all the easier with the help of a mortgage broker.
The content of this post was accurate at the point of publication and is subject to change.